Nashik Capital & Financial Services Pvt. Ltd., Nashik V. Assistant Commissioner of Income-tax,

ITA 513/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1619 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 22-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: HARI KRISHAN
• Keywords: Business income; Speculation loss

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.512 TO 515/PN/2015 '% % / ASSESSMENT YEARS : 2000-01 & 2002-03 TO 2004-05 NASHIK CAPITAL & FINANCIAL SERVICES PRIVATE LIMITED, S.B. BOOB & ASSOCIATES, SUNMANGAL PLAZA, HDFC CROSS ROAD, NASHIK 422 005 PAN NO.AAACN9502B . / APPELLANT V/S ACIT, CIRCLE - 2, NASHIK . / RESPONDENT / APPELLANT BY : SHRI HARI KRISHAN / RESPONDENT BY : SHRI ANIL CHAWARE / ORDER PER R.K.PANDA, AM : THE ABOVE 4 APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 10-03-2015 OF THE CIT(A)-II , NASHIK RELATING TO ASSESSMENT YEARS 2000-01 & 2002-03 TO 200 4-05. SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, THEREFORE, THES E APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF B Y THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. PENALTY OF RS.53,590/- FOR A.Y. 2000-01, RS.35,683/- FOR A .Y. 2002-03, RS.1,69,575/- FOR A.Y. 2003-04 AND RS.4,66,402/- FOR A.Y. 2004-05 LEVIED BY THE AO U/S.271(1)(C) AND SUSTAINED BY T HE CIT(A) / DATE OF HEARING :29.06.2016 / DATE OF PRONOUNCEMENT:30.06.2016 2 ITA NOS.512 TO 515/PN/2015 IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUND S OF APPEAL FOR ALL THESE YEARS. 3. FIRST WE TAKE UP ITA NO.512/PN/2015 FOR A.Y. 2000-01 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASS ESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF SHARE BROKER AND OWN TRADING OF SHARES. IT HAD FILED ITS RETURN OF INC OME ON 29-11-2000 DECLARING NET LOSS OF RS.17,01,560/-. IN THE ASSESSMENT ORDER, THE AO HELD THAT EXPLANATION TO SECTIO N 73 OF THE I.T. ACT WAS APPLICABLE TO THE ASSESSEE AND TREATED THE ASSESSEES SHARE TRADING BUSINESS AS SPECULATIVE BUSINESS. THE AO B IFURCATED THE INCOME AND EXPENSES RELATING TO THE SPECULATIVE SHAR E TRANSACTIONS AND THE NORMAL BUSINESS OF SHARE BROKERAGE . IN OTHER WORDS, THE AO REDREW THE PROFIT AND LOSS ACCOUNT FOR BUS INESS OF ITS OWN TRADING IN SHARES AND HAD WORKED OUT THE PROFIT AT RS.1,00,505/-. THE AO HAD ALSO WORKED OUT THE NET PROFIT OF RS.1,69,153/- IN RESPECT OF BROKERAGE BUSINESS. THE ASSES SEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAME AND ON FURTHER APPEAL THE TRIBUNAL ALSO DISMISSED THE APPEAL FILED BY THE A SSESSEE. IN THE MEANTIME THE AO INITIATED PENALTY PROCEEDINGS U/S.2 71(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.53,590/- U/S.271(1)(C) OF T HE I.T. ACT FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. WHILE DOING SO, THE AO HELD THAT THE ASSESSEE HAD CLAIMED SET OFF OF SPECULATIVE LOSS AGAINST THE INCOME FROM NORMAL BROKERAGE BUSINESS IN SHARES WHICH WAS AIMED AT EVADING THE CORRECT TAX LIABILITY. ACCOR DING TO THE AO, THE ASSESSEE IS WELL CONVERSANT WITH THE PROVISIO NS OF SECTION 73 OF THE ACT AND THE EXPLANATION THEREOF. DESP ITE THIS THE ASSESSEE HAS MAINTAINED COMBINED PROFIT AND LOSS ACCOUNT WITHOUT BIFURCATING THE INCOME/LOSS OF ITS SHARE TRADING BUSINESS AN D ITS 3 ITA NOS.512 TO 515/PN/2015 NORMAL SHARE BROKERAGE BUSINESS. THUS, THE INCOME/LOSS FRO M SPECULATIVE BUSINESS WAS HIDDEN IN THE COMBINED ACCOUNTS MAINTAINED BY THE ASSESSEE. REJECTING THE VARIOUS EXPLAN ATIONS GIVEN BY THE ASSESSEE THE AO LEVIED PENALTY OF RS.53,590/- U/S.271(1)(C) OF THE I.T. ACT. SIMILAR PENALTIES WERE LEVIED FOR A .YRS. 2002-03 TO 2004-05 WHICH ARE AS UNDER : A.Y. PENALTY LEVIED 2002 - 03 35,683/ - 2003 - 04 1,69,573/ - 2 004 - 05 4,66,402/ - 4. IN APPEAL THE LD.CIT(A) UPHELD THE PENALTY LEVIED BY T HE AO FOR ALL THESE YEARS. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A SHARE BROKER WHO PURCHASES AND SELLS SHARES ON BE HALF OF ITS CLIENTS AS WELL AS DOING OWN BUSINESS. THE COMPANY WAS INCORPORATED IN THE YEAR 1995 AND IS FILING RETURNS REGULAR LY. THE METHOD OF ACCOUNTING BEING FOLLOWED IS CONSISTENT AND THER E IS NO CHANGE IN THE METHOD OF ACCOUNTING AND ITS PRESENTATION BEFORE THE TAX AUTHORITIES. THE DEPARTMENT HAS ACCEPTED THE RETUR NS UPTO A.Y. 1999-2000 AND IN MOST OF THE CASES ORDERS HAVE BEEN P ASSED U/S.143(3). IN THE A.Y. 2004-05 THE AO DEVIATED FROM HIS EA RLIER STAND AND INVOKED THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT AND TREATED THE SHARE TRADING BUSINESS OF THE ASSE SSEE AS SPECULATIVE BUSINESS. ACCORDING TO THE AO, THE ASSESSEE COMPANY HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR THE S HARE TRANSACTIONS OF THE CLIENTS AS WELL AS OWN SELF. THE SOURC E OF THE INCOME OF THE ASSESSEE COMPANY WAS INCOME FROM COMMISSION AND 4 ITA NOS.512 TO 515/PN/2015 INCOME FROM SHARE TRADING AND ALL THE ESTABLISHMENT EXPENS ES WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT AND NET INCOME WA S COMPUTED. THE AO THEREFORE BIFURCATED THE INCOME AND ALLO CATED THE EXPENSES ON ESTIMATE BASIS AND WORKED OUT THE NOR MAL INCOME AND SPECULATIVE INCOME/LOSS ON ESTIMATE BASIS AND COMPLET ED THE ASSESSMENT. HE SUBMITTED THAT THE ORDER OF THE AO WA S UPHELD BY THE CIT(A) AND ON FURTHER APPEAL BY THE ASSESSEE THE T RIBUNAL ALSO CONFIRMED THE ORDER OF THE CIT(A). 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT ON THE GROUND THAT ASSESS EE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND THEREBY CONCEALE D THE INCOME TO THE EXTENT OF RS.1,69,154/- FOR A.Y. 2000-01, RS.99,946/- FOR A.Y. 2002-03, RS. 4,61,431/- FOR A.Y. 2003-0 4 AND RS.4,66,402/- FOR A.Y. 2004-05. 8. REFERRING TO PAGES 164 AND 165 OF THE PAPER BOOK T HE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENC H TO SCHEDULES 9 AND 10 WHICH FORM PART OF THE AUDITED ACCOUN TS AS ON 31-03-2004. HE SUBMITTED THAT THE ASSESSEE HAS GIVEN DETAILS OF BROKERAGE ON SAID SHARE BROKER ACTIVITIES AND COMMISSION AND OTHER INCOME THE TOTAL OF WHICH IS RS.23,82,244.73. SIMILARLY IN SCHE DULE 10 THE ASSESSEE HAS GIVEN DETAILS OF INCOME FROM SHARE T RADING ACTIVITY DISCLOSING LOSS OF RS.1,26,561.95. THIS SHOWS THAT THE ASSESSEE HAS MAINTAINED PROPER ACCOUNTS WITHOUT WHICH A LL THESE DETAILS COULD NOT HAVE BEEN PREPARED. REFERRING TO PAGE 155 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE INCOME FROM BROKERAGE AND OTHER INCOM E AND INCOME FROM SHARE TRADING. HE SUBMITTED THAT IT IS A FACT THAT THE ASSESSEE HAS COMBINED THE EXPENDITURE. SINCE THE AO HA S 5 ITA NOS.512 TO 515/PN/2015 BIFURCATED THE EXPENSES BY ALLOCATING THE SAME TO INCOME FROM SHARE TRADING AND BROKERAGE AND OTHER INCOME, THEREFORE, THERE IS AN ELEMENT OF ESTIMATION IN COMPUTING THE INCOME. REFERRING TO PAGE 23 AND 30 OF THE PAPER BOOK THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT SIMILAR DETAILS HAVE BEEN GIVEN FOR A.Y. 2000- 01. REFERRING TO PAGE 81 OF THE PAPER BOOK THE LD. COUNSEL FO R THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO SUCH DETA ILS FOR A.Y. 2002-03 AND PAGE 106 OF THE PAPER BOOK FOR A.Y. 2003-04 . HE SUBMITTED THAT THE AO HAS NOT POINTED OUT WHAT IS THE INACCURATE PARTICULARS. 9. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN T HE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 32 2 ITR 158 HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAIN ABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICU LARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . HE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ALL MATERIAL PAR TICULARS. REFERRING TO THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF S.R.J. SECURITIES LTD. VS. ITO REPORTED IN 16 TAXMANN.COM 90 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT WHERE QUANTUM OF LOSS ON ACCOUNT OF PURCHASE AND SALE OF SHARE WAS UNDISPUTED AND ADDITION WAS MADE TREATING SUCH LOSS AS SPECULA TION LOSS NO PENALTY CAN BE LEVIED U/S.271(1)(C) OF THE I.T. ACT. HE SUBMITTED THAT THE DELHI BENCH OF THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AURIC INVESTMENT AND SECURITIES LTD. REPORTED IN 310 ITR 121 AND THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CAS E OF CIT 6 ITA NOS.512 TO 515/PN/2015 VS. SPK STEELS PVT. LTD. REPORTED IN 270 ITR 156. REFERRIN G TO THE ORDER PASSED BY THE TRIBUNAL IN THE QUANTUM ADDITION HE SUBMITTED THAT THE TRIBUNAL HAS DIRECTED THE AO TO ALLOW THE CARRY FORWARD OF LOSS AS DIRECTED BY THE CIT(A) AS PER THE PROVISIONS OF TH E ACT. AFTER THE APPEAL EFFECT THE NET TAXABLE PROFIT FOR A.Y. 2000-01, 20 02-03, 2003-04 IS NIL AND FOR A.Y. 2004-05 SUCH PROFIT COMES TO RS.3,40,034/-. ORDER GIVING APPEAL EFFECT IS PLACED AT PAGE 215 OF THE PAPER BOOK. 10. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE FINANCE (NO.2) ACT 2014 HAS MADE AMENDMENT TO THE EXPLAN ATION TO SECTION 73 OF THE ACT TO CLARIFY THE REAL INTENTION BEHIND THE INSERTION THEREOF BY REMOVING THE OBVIOUS HARDSHIP CAUSED TO VAR IOUS ASSESSEES WHOSE MAIN BUSINESS IS TRADING IN SHARES. THE AMENDMENT HAS REMOVED THE ANOMALY AND BROUGHT THE A MBIT OF EXPLANATION TO 73 OF THE ACT IN LINE WITH THE INTENTION OF TH E LEGISLATURE BY PLACING THE COMPANIES WHOSE PRINCIPAL BUSINES S IS TRADING IN SHARES AS PART OF THE EXPENSES TO EXPLANATION TO SECTION 73 OF THE ACT. IT WAS BECAUSE SUCH COMPANIES WERE NO T THE COMPANIES FOR WHOM THE EXPLANATION WAS INSERTED. 11. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FIDUCIARY SHARES & STOCK PVT. LTD. VS. AC IT VIDE ITA NO.321/MUM/2012 ORDER DATED 13-05-2016 HE SUBMITTED T HAT THE TRIBUNAL IN THE SAID DECISION AT PARA 5.6.3 OF THE ORDER HA S HELD THAT THE INSERTION OF THE AMENDMENT IN THE EXPLANATION TO SECT ION 73 OF THE ACT BY FINANCE (NO.2) ACT 2014 IS CURATIVE AND CLARIFICAT ORY IN NATURE AND THIS AMENDMENT HAS TO BE APPLIED RETROSPECT IVELY FROM THE DATE OF THE INSERTION TO EXPLANATION TO SECTION 73 OF THE ACT. HE 7 ITA NOS.512 TO 515/PN/2015 ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE S ET ASIDE AND THE AO BE DIRECTED TO CANCEL THE PENALTY. 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A) WHO HAS CONFIRME D THE PENALTY LEVIED BY THE AO. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INS TANT CASE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF SH ARE BROKERAGE AND SHARE TRADING. THE ASSESSEE IS A SUB-BRO KER OF JOINDRE CAPITAL SERVICES LTD. THE ASSESSEE WAS ENGAGED IN TRADING OF THE SHARES FOR THE CUSTOMERS THROUGH THE MAIN BROKE RS AND EARNED COMMISSION INCOME FROM THE SAID TRANSACTION. BESI DES THE ASSESSEE WAS ALSO ENGAGED IN BUYING AND SELLING OF SHARES FOR ITSELF ON DELIVERY BASIS. THE SAID DELIVERIES WERE TAKEN THROUGH DEMAT ACCOUNT MAINTAINED WITH THE BROKERS. THE ASSESSEE COMP ANY HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR THE SHARE TRANSACTION OF THE CLIENTS AND OF ITS OWN SELF AND THE ESTABLISHMENT EXP ENSES WERE DEBITED TO PROFIT AND LOSS ACCOUNT AND THE INCOME/LO SS WAS COMPUTED. WE FIND THE AO APPLYING THE PROVISIONS OF EXPLA NATION TO SECTION 73(2) OF THE ACT TREATED THE SHARE TRADING BU SINESS OF THE ASSESSEE AS SPECULATION BUSINESS. AFTER DEDUCTING THE VAR IOUS EXPENSES BETWEEN THE SPECULATIVE BUSINESS AND NORMAL BU SINESS, THE AO DETERMINED THE NORMAL INCOME AND SPECULATIVE INCOM E/LOSS. THIS BIFURCATION OF THE EXPENSES BY THE AO HAS ATTAINED FIN ALITY SINCE THE ASSESSEE HAS LOST BEFORE THE CIT(A) AS WELL AS B EFORE THE TRIBUNAL. THE AO THEREAFTER HAS LEVIED PENALTY U/S.271(1)(C) O F THE 8 ITA NOS.512 TO 515/PN/2015 I.T. ACT FOR THE ABOVE YEARS, THE DETAILS OF WHICH ARE ALRE ADY GIVEN ABOVE, ON THE GROUND THAT ASSESSEE HAS FURNISHED INACCU RATE PARTICULARS OF INCOME AND THEREBY CONCEALED HIS INCOME. WE FIND THE LD.CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. 14. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT SINCE ALL THE PARTICULARS ARE GIVEN, THEREFORE, THERE IS NO QUESTION OF ANY CONCEALMENT OR FURNISHING OR INACCURATE PARTICULARS OF INCOME. FURTHER, SINCE THE EXPENSES HAVE BEEN ALLOCATED BETWEEN THE SPECULATIVE INCOME AND COMMISSION INCOME THERE IS SOME ELEM ENT OF ESTIMATION IN COMPUTING THE INCOME. THEREFORE, PENALTY IS NOT LEVIABLE IN SUCH A SITUATION. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMENDMENT BROUGHT IN BY THE FINANCE (NO.2) ACT 2014 W.E.F. A.Y. 2015-16 IS RETROSPECTIVE IN NATURE AND ONCE THE SAME IS HELD AS RETROSPECTIVE IN NA TURE THE EXPLANATION TO SECTION 73 IS NOT APPLICABLE TO THE ASSESS EE COMPANY AND THEREFORE THE VERY BASIS ON WHICH PENALTY HAS BEEN LEVIED DOES NOT SURVIVE. 15. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE. FROM THE VARIOUS DETAILS FURNISHED IN THE P APER BOOK WE FIND THE ASSESSEE HAS GIVEN FULL DETAILS OF INCOME FROM SHA RE TRADING ACTIVITY AND INCOME FROM BROKERAGE ACTIVITY FOR ALL T HE YEARS. THE AO HAS ALLOCATED THE EXPENSES TO THE ABOVE INCOME AND THEREFORE SOME ELEMENT OF ESTIMATION IS DEFINITELY THERE WHILE COMPUTING THE INCOME. THE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF S.R.J. SECURITIES LTD. (SUPRA) IN SOMEWHAT SIMILAR CIRCUMSTA NCE HAS HELD THAT WHERE QUANTUM OF LOSS ON ACCOUNT OF PURCH ASE AND SALE OF SHARES WAS UNDISPUTED AND ADDITION WAS MADE TRE ATING THE SAID LOSS AS SPECULATIVE LOSS NO PENALTY CAN BE LEVIED U/S.2 71(1)(C) 9 ITA NOS.512 TO 515/PN/2015 OF THE I.T ACT. THE RELEVANT OBSERVATION OF THE TRIBUNA L AT PARA 5 OF THE ORDER READS AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE COMPUTATION OF TOTAL INCOME AND THE DETAILS FILED WI TH THE RETURN AS FOUND AT PAGES 1 TO 28 OF THE PAPER BOOK, CLEARLY SHO WS THAT THE ASSESSEE HAS PLACED ALL THE DETAILS OF SHARE TRANSACTION D ONE BY THE ASSESSEE. THE AUDIT REPORT IN THE FORM 3CD AS FOUND AT P AGES 15 TO 19 OF THE PAPER BOOK ALSO DO NOT TALK OF EXPLANATION TO SECTION 73 BEING APPLICABLE. THE TRIAL BALANCE IN RESPECT OF THE TRAD ING OF SHARES QUANTIFYING OF LOSS OF RS.34.99 LACS WAS ALSO PLACED BEFO RE THE A.O. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE A.O. HAS INV OKED THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT TO TREAT THE LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF SELF TRADING IN T HE SHARES TO AN EXTENT OF RS.37,40,568/- AS SPECULATIVE LOSS. A PERUSAL OF THE REPLY AS FILED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDIN GS ALSO EXPLAINS THE REASONS GIVEN BY THE ASSESSEE FOR THE NON-AP PLICABILITY OF EXPLANATION TO SECTION 73 OF THE ACT. THE FACT THAT THE ASSESSEE HAS INCURRED A LOSS IS NOT DISPUTED. THE QUANTUM OF THE LOSS IS ALSO NOT DISPUTED. THE ONLY ISSUE IS WHETHER THE DEEMING PROVISI ONS OF EXPLANATION TO SECTION 73 OF THE ACT HIT THE ASSESSEE I N SO FAR AS THE BUSINESS LOSS AS INCURRED BY THE ASSESSEE IS TREATED AS SPECULAT ION LOSS FOR THE PURPOSE OF COMPUTATION OF TAXABLE INCOME. A PERUSAL OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AURIC INVESTMENTS & SECURITIES P. LTD. REFERRED TO SUPRA, SHOW S THAT THE HON'BLE HIGH COURT HAD UNDER SIMILAR CIRCUMSTANCES WHE RE ALL THE REQUISITE INFORMATION AS REQUIRED BY THE A.O. WAS FURN ISHED BY THE ASSESSEE AND THERE IS NOTHING ON RECORD TO SHOW THAT IN F URNISHING ITS RETURN OF INCOME THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME, JUST ON ACC OUNT OF THE TREATMENT OF BUSINESS LOSS AS SPECULATION LOSS BY THE A.O. D OES NOT AUTOMATICALLY WARRANT THE INFERENCE OF CONCEALMENT OF INCOME. HERE AS IT IS NOTICED THAT THE FACTS IN THE ASSESSEE'S CASE ARE ID ENTICAL TO THE FACTS OF THE CASE IN THE CASE OF AURIC INVESTMENTS & SECURITI ES PVT. LTD. IN THE CIRCUMSTANCES RESPECTFULLY FOLLOWING THE DECISION OF HO N'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AURIC INVESTM ENTS & SECURITIES PVT. LTD., WE ARE OF THE VIEW THAT THE PENALTY LEVI ED U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE. IN THESE CIRCUMSTANCES, THE PENALT Y AS LEVIED BY THE A.O. AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED . 16. THE MUMBAI F BENCH OF THE TRIBUNAL IN THE CASE OF F IDUCIARY SHARES & STOCK PVT. LTD. (SUPRA) RELYING ON VARIOUS DECIS IONS HAS HELD THAT THE AMENDMENT INSERTED IN EXPLANATION TO SECTIO N 73 OF THE ACT BY FINANCE (NO.2) ACT 2014 W.E.F. 01-04-2015 IS CLARI FICATORY IN NATURE AND THEREFORE OPERATES RETROSPECTIVELY FROM 0 1-04-1977 FROM WHICH DATE THE EXPLANATION TO SECTION 73 WAS PLACED ON THE STATUTE. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PA RA 5.6.11 OF THE ORDER READS AS UNDER : 10 ITA NOS.512 TO 515/PN/2015 5.6.11 IN OUR HUMBLE VIEW, DRAWING SUPPORT FROM THE JUDICIAL PRONOUNCEMENTS CITED AT PARAS 5.6.3 TO 5.6.9 OF THIS O RDER (SUPRA) WE ARE OF THE CONSIDERED OPINION AND HOLD THAT THE AMEN DMENT INSERTED IN EXPLANATION TO SECTION 73 OF THE ACT BY FINANCE (NO. 2) ACT, 2014 W.E.F. 01.04.2015 IS CLARIFICATORY IN NATURE AND WOULD THE REFORE OPERATE RETROSPECTIVELY FROM 01.04.1977 FROM WHICH D ATE THE EXPLANATION TO SECTION 73 WAS PLACED ON THE STATUTE SIN CE THIS AMENDMENT TO SECTION 73 OF THE ACT '.... OR A COMPAN Y THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF TRADING IN SHARES ..... ' BRINGS IN THE ASSESSEE WHOSE PRINCIPAL BUSINESS IS TRADING OF SHARES. THEREF ORE, THE LOSS INCURRED IN SHARE TRADING BUSINESS BY SUCH COMPANIES, I.E. LIKE THE ASSESSEE WILL NOT BE TREATED AS SPECULATION BUSINESS LOSS BUT NORMAL BUSINESS LOSS, AND HENCE THE SAME LOSS CAN BE ADJUSTED AGAIN ST OTHER BUSINESS INCOME OR INCOME FROM ANY OTHER SOURCES OF THE YEAR UNDER CONSIDERATION. IN THIS VIEW OF THE MATTER, WE DIRECT THE AO TO ALLOW THE ASSESSEE'S CLAIM FOR SETTING OFF THE LOSS FROM 'SHARE TRAD ING BUSINESS' AGAINST 'OTHER BUSINESS INCOME' AND INCOME FROM ANY OT HER SOURCES DURING THE YEAR UNDER CONSIDERATION. SINCE WE HAVE A LLOWED THE ASSESSEE'S PRIMARY CONTENTION/GROUND, WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE THE ALTERNATIVE CONTENTION RAISED BY THE ASSESSEE. SINCE THE BUSINESS OF THE ASSESSEE COMPANY IS THAT OF T RADING IN SHARES, THEREFORE, IN VIEW OF THE ABOVE DECISION OF THE MUM BAI BENCH OF THE TRIBUNAL, THE ASSESSEE IS OUT OF THE PURVIEW OF EXPLANATION TO SECTION 73. ALTHOUGH THE QUANTUM ADDITION HAS BEEN SUSTAINED BY THE TRIBUNAL, HOWEVER, IT IS THE SETTLED LAW THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND THE ASSESSEE ALWAYS CAN RAISE NEW PLEA DURING THE PENALTY PROCEEDINGS . 17. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT A MERE MA KING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT T O FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF TH E ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUN T TO FURNISHING INACCURATE PARTICULARS. 18. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDE RED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. WE T HEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO C ANCEL THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961. THE GRO UNDS 11 ITA NOS.512 TO 515/PN/2015 RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 19. SIMILAR GROUNDS HAVE BEEN RAISED BY THE ASSESSEE FOR A.YRS. 2002-03 TO 2004-05. SINCE THE FACTS IN THE ABOVE ASSES SMENT YEARS ARE IDENTICAL, THEREFORE, IN VIEW OF OUR REASONS GIVEN ABOVE , THE GROUNDS RAISED BY THE ASSESSEE IN THE ABOVE APPEALS AR E ALSO ALLOWED. 20. IN THE RESULT, ALL THE 4 APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-06-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 30 TH JUNE, 2016. ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - II, NASHIK 4. 5. 6. THE CIT-II, NASHIK $ ''(, (, / DR, ITAT, A PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE